Reprinted by permission of John Wiley & Sons. Excerpt from The Strategy Gap: Leveraging Technology to Execute Winning Strategies. Copyright 2003 by Michael Coveney, Dennis Ganster, Brian Hartlen, Dave King.
Most business professionals understand that achieving a long-term goal requires a series of logical, achievable, sequential steps. Yet the steps that lead from where a business is today to where it wants to be - its objectives - often are missing.
The "strategy gap", as this group of missing steps is called, is real and exists within most organisations. Often unseen, the gap is a threat to the future performance - and even survival - of an organisation and is guaranteed to impact the efficiency and effectiveness of senior executives and their management team.
The failure of organisations to manage the transition from where they are to where they want to be is one of the most critical management challenges facing senior executives today.
One area that causes the strategy gap involves the traditional systems used to support the planning, budgeting, forecasting, and reporting processes. Issues include fragmented systems and misplaced dependence on enterprise resource planning (ERP).
In most organisations, planning, budgeting, forecasting and reporting are treated as separate, disconnected processes and supported by different technology solutions. In fact, these processes are all part of the much larger process of strategy implementation. The following analogy illustrates why this separation does not make sense.
The journey that a business takes over time is like travelling down a road. The road curves and changes direction, and its exact route often is hidden from view. In the same way, business direction continually varies because of changing customer requirements, competitors' actions, or other occurrences in the business environment. On this journey, the business objective rests on the horizon. This objective, based on current circumstances and assumptions, is the planned destination for the organisation. It serves as a beacon, guiding the organisation's actions and decisions.
The journey is divided into a number of shorter segments, each of which the organisation will arrive at over time, allowing the organisation to gauge its progress. To reach the point on the horizon, the traveller outlines a route. This plan identifies the main roads to be travelled and the major cities the traveller will pass through en route to the final destination.
In the same way, strategic plans outline the route an organisation will travel to reach its objective. The journey may take months or years to complete. The key roads are analogous to the strategic plan's tactics that must be performed to achieve the objective. Cities are analogous to key performance indicators that will tell the organisation if the tactics have been completed and if it is on target for success.
Continuing, the traveller may plan in greater detail the portions of the journey to be attempted in the near future. The plan may include the names of townships, descriptions of landmarks, and locations of road junctions. These are vital indicators. Without them, the traveller may go in the wrong direction without realising it until much later.
The budget is like that detailed plan outlining the organisation's immediate route. It is very much linked to the strategic plan but contains far more detail. With the budget, the business assigns money, people and assets to the initiatives that will keep the organisation on course to reach its objective.
Monitoring progress relative to the detailed plan is a vital activity because it shows the organisation whether it is on target. Past performance is of interest, but it actually does little to help the business navigate the road ahead. On the journey, organisations will come up against unexpected diversions, such as construction (activities that are not yet implemented), accidents (activities that are having an adverse impact on performance) and heavy traffic (intense competition for the same customers).
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.